We’ll skip right over the fact that it’s a TIC, parking is leased and half a block away, and it was subject to an owner move in eviction (OMI) in 2002. And instead, we’ll simply focus on the architecture (can you say quintessential?), condition (pride of ownership comes to mind), and character/square footage (lots of both).
∙ Listing: 1392 McAllister (3/2) 2,600 sqft – $998,000 (TIC) [MLS]

Comments from “Plugged-In” Readers

Wow, that’s a lotta Victorian. They don’t cite the tax records for the square footage, so I wonder if the attic conversion was legal.
This area has some of the most beautiful houses in SF, but I lived in a pretty Edwardian on the other side of the street…. my room was street-side, very impressive looking, but facing north and was always incredibly cold. I hope this building is better insulated than my old place was.
I miss this area for a lot of reasons, but one thing I don’t miss is the parking. IMO, it’s the worst in the city. I haven’t checked lately, but residential permits eluded this area when I lived there. So if you have 2 cars, be sure you don’t mind renting 2 spots or don’t mind parking down by the projects where parking is more plentiful.

An owner move in eviction or OMI does not automatically amount to never becoming a condo, particularly if it was a 2002 OMI. I believe that corollary went into effect for OMIs on or after May 1, 2005. And it is only if there were two or more tainted “no fault” evictions, such as OMI.
[Editor’s Note: Unless involving a protected tenant, even multiple post 2005 evictions would not necessarily preclude future condo conversion (see Prohibition On Condominium Conversion Passes). One issue to consider, however, is how the OMI eviction might affect the liquidity and use of the other two units in the building (as this unit has already played the OMI card).]

Fluj has it right – OMI is entirely legal while Ellis Act evictions have a cut off date in 2005. Before the cut off date, Ellis evictions are allowed to enter the condo lottery, after that, they are penalized 10 years before they can enter the condo lottery. Protected tenant evictions are allowed in SFR’s and single condo units, but once you get above 2 units if you evict a protected tenant then you are eliminated from entering the condo lottery. I actually think that a TIC unit with the OMI eviction is a positive feature of the unit. Once an OMI is performed in a multi unit building (after a certain date I believe) then that unit is designated as the owner’s unit and you can’t do an OMI into other units in the building. So that would give you the ability to rent this TIC unit, whereas the other ones you wouldn’t want to rent as then you couldn’t get the tenant out.

The laws are fairly complex. Any eviction of a protected tenant = no conversion. Merely because the owner didn’t KNOW the tenant was protected does not enable conversions. Lots of tenants don’t know their rights and may not have asserted protected status. If you find out when you go to convert that the tenant that was evicted was protected, no conversion. Period.
More than 2 evictions of any type: if there were multiple owners on 4/6/06, you can convert. If there was one owner of the building on 4/6/06, you must wait ten years before entering the lottery, which can then take another ten years to pop out of.
Note that if a tenant was merely asked to leave, and left in response to the request, that tenant has been held to count as an eviction, even though no eviction was formally registered. So beware: there may be hidden evictions you don’t know anything about, and those can count as the two. When you go to evict the second tenant, that tenant may inform you of other tenants who were asked to leave and did so and so now you are screwed.
OMI rules allow only one unit per building to be evicted so that the owner of the unit can move in or the relative of an existing owner who lives there can move into another unit also owned by that owner. If you own the unit that was used to OMI someone out, you can do it again, though now that counts as two evictions, though they have to be after some time in 2005 to be your two strikes.
You need more than a 25% ownership interest to OMI evict (and maybe 50% – the law is unclear), so in a 6 unit building, you probably can’t OMI evict.
If one of your other co-owners wants to evict, and they aren’t the first OMI in the building, they can use the ellis act (because only 1 unit may be OMI’d per building, forever), but that means no one can rent their units for 5 years. Note, this unit may not be the OMI unit.
When you evict a tenant, even lawfully, the tenant will likely call the building inspector and have all items not built with permits or other code violations issued a notice of violation. For example, an attic or basement that wasn’t done with permits must be torn out as living space, meaning heaters and plumbing must be removed. Pipes and drains must be filled with cement to make sure the violation isn’t put back. You can’t use the laws to throw someone out of their home if you are violating the housing laws yourself, so before evicting a tenant, ask yourself if you are willing to tear out the illegal attic or basement. If not, you have a tenant for life. Otherwise, you will be forced to pay for the removal AND suffer the loss from the removal.
Sorry for the long diatribe: and that just scratched the surface.

going condo is not worth all the trouble when you have fractional tic lending fairly readily available. the difference in the apr of such a loan versus a condo loan is not that big; and the time involved with residency req.s and other expenses of going condo would outweigh the higher loan costs. and this listing illustrates that the price diff between tic and condo is not that great anymore.
as far as tipster’s contention that every evicted tenant will report code violations and that the dbi will actually shut down lots of in-law apartments, well, that has not proven to be the case.

Thanks for the info, tipster. I knew the OMI thing didn’t neccessarily eliminate the possibility of condo converion, but I do know the laws are far more complex a cursory analysis can summarize.
If you go the legal route with evictions, I think you can count tenants complaining to the DBI. That’s why so many tenants are paid $100,000 or more to quietly walk away from a unit. That it could still be counted as an eviction is pretty scary.

Paco,
I’m not going to give you names, addresses or anything, but yes, I do have personal knowledge of many. I don’t deal with it directly, but I do a lot of residential structural engineering and have worked with owners on converting rental units to TICs. A lot of them are developers/flippers that I don’t feel a lot of pity for; they know what they’re getting into and calculate these costs into their budgets. It’s a type of business I wish I could cut the “value added” services of the developer out of the final price tag and buy my own home that way.
Pricey tenant payoffs are not exactly a well-kept secret.

After seeing this $1M place, I feel much better about paying only $1,900 per month to rent my 3rd floor, 9room victorian apartment which is similar in size and layout with a better location (but a worse kitchen and floor finishes). I think I’d be better off splurging once on furniture than on a monthly mortgage. What would the monthly mortgage nut be on a $1M place with 20% down?

kaya,
i guess i would be one of those that you do not feel pity for (not that i’m looking for pity)…
i’ve negotiated a few buyouts myself and i am in contact with an attorney that does them frequently (over 30 last year), so i can only speak from my own experience. and i can tell you the average buyout is $20k for a longer term tenant, around $12k for the regular, young, single tenant. BTW, ellis relocation is around $4,600 each (plus $3k for protected).
it does not surprise me to hear anecdotal, heard it from a friend of a friend type stories of $100k windfall buyouts. i’ve met other tenants who had the notion that nothing less than the extortion of $40k each from their landlord could persuade them to vacate his premises. but i have not met anyone who actually received such large sums so i’m a little surprised to hear that you personally know of ‘many’.
you wrote “If you go the legal route with evictions, I think you can count tenants complaining to the DBI. That’s why so many tenants are paid $100,000 or more to quietly walk away from a unit.”
i think your logic may be a bit flawed here. if you do not do the eviction legally you risk more than $100k for wrongful eviction. also the thought that paying $100k or more is worth the dubious coverup of some illegal work/unit is not a good use of capital. perhaps your experience is different…

I guess if you only need to convince one, non-protected tenant to move out, you can empty a place for the money you’re talking about. I have a friend who was “asked to move” from his apartment. He received $30k for a year’s occupancy; not a bad deal. It was a 2 unit building and the buyers were looking at spending a lot more to get the 2nd unit vacant. I do not know how much more, but both deals were done off-the-record.
As for my clients, I don’t ask too many questions, but they’ve clearly had chips on their shoulders about the expense. When I say many, I mean I’ve personally worked on 7 projects of this nature which seems a lot to me considering I don’t specialize in this kind of work. I guess if you can’t wait the 10 years for an Ellis Act to clear and you have more tenants than the OMI allows you to deal with, you find alternate methods?
More power to you if you don’t get involved in that as I agree that the costs don’t seem worth the risk, but that’s not my decision nor my logic.
As for covering up illegal work, I don’t think that’s what the payoffs are for. It’s just that if the tenant decides it’s worthwhile to extend their stay by going through with a protracted legal proceeding, they are likely to start bringing in city inspectors for anything they can come up with that will delay the process.

satchfan,
omi only requires relocation fees of around $4,600(per person, $13,5k per apt?)
i think. the $20k is for buying a tenant out of his tenancy-which is NOT the same as evicting someone, despite what you may have read here earlier…
kaya,
the buyout average #’s i listed earlier were for tenants from 2 -8
unit buildings. i stand by ’em.
sounds like your many $100k’s is now one $30k.
” I have a friend who was “asked to move” from his apartment. He received $30k for a year’s occupancy; not a bad deal. ”
also “As for my clients, I don’t ask too many questions, but they’ve clearly had chips on their shoulders about the expense. ”
i don’t blame them as they’ve had money extorted from them.
also “I guess if you can’t wait the 10 years for an Ellis Act to clear”
i believe that’s 5 years now.
also “as for covering up illegal work, I don’t think that’s what the payoffs are for. It’s just that if the tenant decides it’s worthwhile to extend their stay by going through with a protracted legal proceeding, they are likely to start bringing in city inspectors for anything they can come up with that will delay the process.”
good luck with that. there’s no basis for a “protracted legal proceeding”. tenant accepts a buyout or is omi’d or ellis’d.
and the idea that tenants know more about supposed code violations of landlords than is good for the landlords is mostly laughable.

“and the idea that tenants know more about supposed code violations of landlords than is good for the landlords is mostly laughable.”
I was certainly laughing when I was bought out of my apartment for 18k in Nob Hill last year. Everyone in the building knew about the owner’s many, many code violations during the remodelings (no permits, unlicensed contractors, lack of heating, etc.) and reported him repeatedly to the city since he was such a jerk. The previous owners were great and the building was only sold because the husband had passed away.
In the six months before I given my offer two of my neighbors won not-too-shabby settlements for a wrongful eviction and a failure to do necessary repairs.
He’s been trying to sell some of the units as TICs without a bite for over a year and the building has had over 13 empty units out of 21 the whole time. $500k for a tiny one bedroom TIC next to a fire station, hospital, and noisy bar? Yeah, good luck with that. The remodeled units look very nice but hide the extremely shoddy work done. Thankfully I took his offer, the kitchen gas line in my old unit exploded a couple of months after the remodeling and blew out half the place along with kitchen in the adjoining aparment. Luckily the elderly lady that lived there was out shopping at the time.

sounds like you proved my point.
as you wrote ” Everyone in the building knew about the owner’s many, many code violations during the remodelings (no permits, unlicensed contractors, lack of heating, etc.) and reported him repeatedly to the city since he was such a jerk. ”
so by kaya’s and tipster’s logic this owner should have been paying $100k instead of $18k.
out of curiosity which 21 unit building in nob hill are you talking about?

California/Leavenworth. You’ve got the hospital down one way, the fire station up the other, and a bar that’s non-stop noise from 11pm to 3am from Thursday to Sunday. At least you don’t need an alarm clock cuz the cable car will wake you up.
I probably could have gotten much more than I did but just wanted to get out of there and the owner didn’t and still doesn’t seem that concerned about either renting out the units or selling them so I figured there wouldn’t be much negotiating room. What the guy had to pay for the lawsuits was way more than I got and those tenants are still in the building. He bought the building cheap enough that it would cash flow quite well if he bothered to actually rent the units.
I figured a bird in the hand, etc., took the money and ran. Moved to Inner Richmond where I finally have a garage again and you don’t get gouged by the grocery store prices. Moral is that I shoulda never moved out of my 3 bedroom $1300/mo. gi-normous Pac Heights place years ago.

After going over the thread again I have to agree with Paco about buyout amounts (but not necessarily with tenants not knowing about code violations). According to the real estate attorney I consulted with getting more than 35k for a buy-out is really hard. You need to be a 10+ year resident or disabled/elderly to start seeing offers significantly over the Ellis minimum. Or hope that the owner is really, really desperate.

Well, paco made a lot of incorrect assumptions. when the tenants bargain collectively and know the owner does not want to wait for an ellis act, they have a lot of leverage. omi’s have a lot of restrictions, and when the tenants know that, they can bargain for more than the amounts guaranteed by prop h.

kaya,
as someone who has actual experience in these situations i know better than to assume that conventional wisdom is correct.
btw, i’m assuming you cannot actually back up your statements about “many” who have gotten $100k.
the unusual situ that david 1 describes above is another case in point; if a building is more that six units it is not eligible for condo conversion. as such its a much better business decision to simply ellis a building. you are then sure about the costs, legality and time frame.
not knowing this/doing this is the mark of an uninformed person. or maybe i can assume that they are looking to make a small fortune (by starting with a larger one!).

WOW, what a fabulous place! I have no doubt they will get what they are asking. The neighborhood can’t be beat either with the park just a block away. Isn’t there a MUNI stop right out the front door of that place too?

[Paco,]
Now you’re getting warmer. 2-6 unit buildings, DIY flippers = bad combo. That’s why simply telling someone “no problem, OMI $4500/person” is misleading. I already told you I played no part directly in the transactions, so assume what you like, but I have no reason to believe I was lied to.

LOL. I was the evicted tenant. It was a totally legal OMI, no buy-out. They wanted to live there and I didn’t prevent them. The previous buyer wasn’t so lucky, but he couldn’t tell the truth and didn’t understand SF rent control. I didn’t call the building inspector and there was no protected tenant. It was the only OMI in the building’s history, and will be moot when the condo conversion goes through.
Architecturally, the place is truly special, but beware of the glossy paint job. It was a condemmed crack house before we moved in in ’94. We were the only tenancy until the OMI in ’03. We had lots of problems with water coming in through the roof and coming out through the walls, but I’m sure that has been rectified. I’m glad to see the O’Keefe and Merritt is still there. It’s classic and boils water in a heart beat. I should have taken it with me.
If the windows haven’t been replaced, they rattle in the wind and let plenty of cold air in. The rear of the house has settled considerably which is most noticeable where the windows meet their casings. And the front of the house is alive with sounds from ghetto stereos, fire engines, and church goers, but you get used to it. The floors are beautiful when they are stained very dark, but they’re pine so they show dimples anytime you sit is a chair. If you choose to redo the floors, check out your neighbors’ floors first. Anything other than really dark or really light will look like crap. And for Pete’s sake, do something about those awful paint choices!
$1m for a TIC w/o parking? You have to really be in love with the architecture. We had a historian come through and do a piece on the building. The architecture is known as castle-esque. The curved glass bay windows and conical roofs are meant to mimic a castle. The inside of one of these conical roofs is known as a “witch’s turret,” which you will find in what is now the master bedroom/freezer. The two buildings immediately downhill were built in the spring of 1902 (I believe) and this one was built in the fall of the same year to match. We celebrated her 100th birthday.
The upper-most room was originally a ball room and we kept the theme with almost monthly all-night house parties. Unless you just moved here from the midwest, you are likely to know someone who went to at least one of our “1392” parties in the mid 90’s. They were legendary.

Fascinating and informed comments by all. Zero – good job being a reasonable guy. In reading about these ridiculous, overbearing, and intrusive regulations – and in thinking about the cast of characters that run San Francisco (and have run it over the past few decades), is it any wonder that we have insufficient housing supply and the highest rental and housing costs in the nation? We need a new government (and a lot less of it).

FYI: $100K plus buyouts are an exception and should not be considered by anyone on this thread a baseline for anything. A $100k buyout may be warrented in some SF trophy neighborhoods under certain circumstances. ie Protected tenant living in a large flat a north of California St. with grossly under market rental amount. Most attorneys will tell you that if you are considering paying multiple tenants out at any price higher than $60K, you should strongly consider Ellising the building.

Agreed about the myth of the windfall buyouts – I spoke with a developer recently who had an apartment building they wanted to condo and the profit margin for converting to condo is a lot smaller now. They budgeted about $20K per unit for a 6 unit building for buyouts (mind you – everyone in the building has to accept them or it doesn’t work). They mentioned that substantially higher buyout than this made it infeasible to convert and that they would leave it as a rental otherwise.

my friend’s boss ellis acted a 10 unit building that was originally built as a grand mansion. he’s living in it now as a single family; it is located on a block with a lot of large single family homes as well as at least five multifamily buildings. he never got the rights to legally convert it back to the original grand mansion. i’m pretty sure that at least four of the units were illegal inlaws.
There were apparently a lot of tenants living there when this guy purchased it a few years back. He ellis acted it and i guess he’s living there in the whole place. AT what point does he becoming in violation of merging units? i vaguely recall that at along as there is a small but functioning kitchen and bath in each living unit there is no violation of the unit merger prohibition. i guess if he starts taking down walls between units then there’s a violation? can he change the living / dining room level back to the three or four original grand rooms but still keep a very small microwave and toilet in each room to maintain the definition of a “living unit” ?
i guess one would be able to remove the four units which were illegal inlaw… that would still leave six units which couldn’t be merged to one even though the original building was one house. i suppose one could apply to move the walls of the six units around so as to create at least six spaces which meet the minimum housing unit size of 400sf (not sure it that’s the cutoff size). that means that the main residence would have six spaces with somehow separate minimum habitability levels. each habitable unit would need fire egress, kitchen, fire partitions, fire rated doors, and even handicap / ADA required stuff??? is this the case??
another one of my friend’s parents have a four unit place. they are using the whole four units as their home. i think they’ve managed to maintain very small kitchens in three of the units. i guess they aren’t in violation of the merger rules either? they are always afraid of being discovered. i think the original building was built as a two unit residentce.